Supreme Court Action: Aiding and Abetting and Arbitration in a Treaty Context

The Supreme Court has been busy in the last week. Three more opinions were released earlier this morning. The first of these is Rosemond v. United States (12-895). Rosemond was part of a drug deal gone bad. He was with others who planned to sell a pound of marijuana to two individuals. The parties met and the buyers snatched the marijuana without paying for it and ran off. The sellers gave chase. Someone, possibly Rosemond, fired a gun in the general direction of the buyers.

The Government charged Rosemond with violating 18 U.S.C §924(c) which criminalizes armed drug deals. The Government further charged Rosemond with aiding and abetting that offense under 18 U.S.C. §2. The federal district judge gave jury instructions that covered the §2 charge and the jury found Rosemond guilty of aiding and abetting. The real dispute is with the instructions given for the charge under §924(c). The trial judge instructed the jury that Rosemond was guilty of aiding and abetting the §924(c) offense if he (1) “knew his cohort used a firearm in the drug trafficking crime” and (2) “knowingly and actively participated in the drug trafficking crime.” Rosemond was convicted on the §924(c) charges and the Tenth Circuit affirmed.

The Supreme Court reversed as to the disputed instructions. The Court held that the instructions required the Government to prove that Rosemond had advance knowledge that his cohort had a gun to satisfy §924(c). The case was returned to the Tenth Circuit for further proceedings. Justice Kagan delivered the opinion of the Court and was joined by Chief Justice Roberts, and Justices Kennedy, Ginsburg, Breyer, and Sotomayor. Justice Scalia joined the opinion with the exception of footnotes 7 & 8, presumably because these presented hypotheticals unnecessary to the disposition of the case. Justice Alito filed an opinion concurring and dissenting in part and was joined by Justice Thomas.

The second case decided today is BG Group PLC v. Republic of Argentina (12-138). It’s an arbitration case based on the terms of an investment treaty between the United Kingdom and Argentina. The terms required disputes to be sent to the local courts and then to arbitration if no decision is rendered in 18 months. BG Group belonged to a consortium that held a majority interest in MetroGAS which had an exclusive license to distribute natural gas in Buenos Aires. The license provided that gas tariffs would be calculated in dollars and provide a reasonable rate of return. Argentina changed its law to calculate the tariffs in pesos which caused losses rather than profits.

BG accused Argentina of violating provisions of the treaty and went directly to arbitration. Argentina objected to skipping the local courts. The arbitration panel said it had jurisdiction due to factors such as Argentina changing other laws which restricted access to its courts. The panel ruled in BG Group’s favor. Both Argentina and BG Group appealed the decision in federal district court in the District of Columbia. Argentina wanted to overturn the decision and BG Group wanted to confirm it. That Court affirmed the award. The Court of Appeals reversed saying the U.S. Courts had to determined the rights under the treaty de novo and should not give deference to the arbitrators conclusions. It further held that BG Group had to use the Argentina courts first and then wait the 18 months before proceeding to arbitration.

The Supreme Court reversed. It stated that the local litigation provision was up to the arbitrator to decide and courts should give deference to those decisions. It said if the treaty were an ordinary contract it would be interpreted against the parties intent. Courts use presumptions to determine these intentions when the contract is silent about the threshold questions about arbitration. One presumption is that courts decide “arbitrability” and arbitrators decide application of procedural preconditions for the use of arbitration. The provisions at issue in this case are procedural giving the arbitrators the ability to decide whether there needed to be compliance with the treaty terms in light of the events.

The Court stated that treaties are essentially contracts between two countries and that calling document a treaty makes no difference to the analysis here. The local litigation requirement in the text of the treaty is not a condition of consent, nor is there any language that overcome a court’s presumptions. Justice Breyer delivered the opinion of the Court and was joined by Justices Scalia, Thomas, Ginsburg, Alito, and Kagan. Justice Sotomayor joined with the exception of Part IV-A-1. She also filed an opinion concurring in the judgment. Chief Justice Roberts filed a dissenting opinion and was joined by Justice Kennedy.

The third case is Lozano v. Montoya Alvarez (12-820). The case covers time limits in which to initiate actions under the Hague Convention on the Civil Aspects of International Child Abduction. I will summarize that opinion in a later post. –Mark

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